Monday, September 22, 2008

When was asked to resign a few months ago Mr. Mazaheri told the reporters: "I have told the President he has to fire me, I will not resign." The governor of Central Bank of Iran may be the last member of cabinet who spoke out against President Ahmadinejad's economic policies, advocated by Mr. Jahromi the minister of labor.The rift between two reached a new height when Mr. Jahromi wrote a letter to the President asking him to fire both of them. It seems the President prefers to let Mr. Mazaheri go. Mr. Mazaheri is the 12th member of administration who is being replaced. Like Mr. Danesh-Jafari the former minister of economic affairs, it seems he too failed to persuade the other members of administration that injecting cash into economy causes inflation.Mr. Mazaheri has served in several cabinets in the past; however his term as the governor of Central Bank is the most remarkable one. While many of his colleagues advocated lowering the interest rate and some even thought of dismantling the banking system he became the voice of reason. He argued that lowering interest rate amidst rising inflation is not a wise move. He also argues that financing short term return projects is not advisable.His refusal to lower the interest rate might as well save the economy. His refusal to open the banks’ coffers to finance Mr. Jahromi’s short term investment programs might prevent the stagflation. His departure was unexpected, but it also signals that the President once again sided with his minister of labor. It seems now the President has the key to the coffers of Central Bank.

Monday, September 15, 2008

Summer is coming to an end in Iran a season of impatient and anxious anticipation for hundreds of thousands of high school graduates who had participated in Iran’s National University Entrance Exam or as the dreaded test is known: Konkour.Iranian universities and colleges do not act independently in admitting students, like many other things in the country admission to universities is centralized, with the exception of Azad University network having its own national entrance exam.Konkoor is coordinated by a national organization, called “Sanjesh” or National Test Center. All high school graduates and pre-college students take it on the same day across the country. Then they submit a college-major selection card to this organization, this card includes all of their choices of places and the majors they would like to study in. A computerized algorithm chooses what they can study based on their rank, calculated based on their score.For example if a person’s first choice is to study Electrical Engineering at University of Tehran, with a capacity of 25 students, and his rank is 55 he is admitted if and only if his rank is among top 25 people who wanted to study this field.There is no wonder that filling this spreadsheet or “Entekhab e Reshteh” (literally means “subject selection”) card is a thriving business and hundreds make millions in it. Thus some fields in the higher education[1] are better than others and the best of the best enroll in them, although they might be clueless as to the future. Given the rigidity of the system and bureaucracy involved with changing majors within the school system the field one is accepted in, is the field he or she graduates in.Given the discrepancies of among provinces in the quality of education and infrastructure, Iran is divided intro three regions, each with their own share of total student seats in the public universities. This system has guaranteed a fair chance of admission for the students from less developed areas. This year this system has changed.In a strange move National Test Center executed a new law that allocates 65% of any university’s seats to the local population of its region. The new system allocates 65% of the seats in Iran’s best universities, which are located in Tehran the capital, to the residents of the first region. This has deprived many talented students from enrolling in these schools causing them to challenge these results.It is not clear that if this new law has been actually ratified by the legislation and some MPs have voiced their objections to its implementation. In the meantime Iran’s Higher Education Ministry moved to remedy the situation by adding 10% to the seats at Iran’s top universities to accommodate those who are not satisfied by the new system; a rather short term patching of a faulty strategy.In defending localizing universities some argue that such system guarantees the residents of a province to study in that province and to “serve” in that province. However many ask how this would create sustainable growth since the high quality universities are in the most developed areas and such a decree denies the less developed areas of country fair access to high quality higher education. One must admit that there are many scratching their heads in Tehran wondering as to causes of such policy.[1] Economics is not usually among the first choices. Engineering majors and medical studies are the first choices and business majors and economics are not as favored. Most unfortunately this has created a gap in Iran’s higher education.

Sunday, September 14, 2008

The expanding service sector, growing number of private contractors and an increasing female college graduate population have increased both female workers participation rate and female employment in Iran. This has introduced a new phenomenon to provincial offices of government agencies and ministries: female engineers and representatives of consulting firms and contractors.Wrapped in traditions and old understandings of one’s roles and duties the local administrators vacillate between denial and acceptance. A recent example is that of Transportation Ministry Provincial Office in Kerman. They simply banned female representatives of their contractors and consulting firms from entering the building. Reported by Tabnak website currently this office only answers men and letters delivered by men.Reading the related article your correspondent was amazed to read the comments of other readers. While some were outraged and severely critical of such decision, some were actually supportive of such a decision. These were divided mainly into two groups.First group included those who believed since there are unemployed men in the country; women should not have been employed in the first place. One even said: “If we had logic in our decisions in this country, jobs would have gone to men first and then unfilled positions to women.” This argument does not rest on productivity and the benefits of a competitive labor market.The second group constituted of those who simply said women get through the official system in Iran, because they are attractive. This absurd generalization of the fact of matter is denying the abilities and skills of hundreds of women in Iran who work hard and efficiently and get through the system because of their persistence. Reading these arguments one has no choice but to point out that the absence of economic analysis of the realities of labor market has given rise to popular misconceptions and beliefs of female labor force, unemployment and the causes of unemployment. Men are not unemployed because some women are employed and women are not more efficient because they are attractive! In the void created by these misconceptions it is not difficult for some local administrators go as far as banning women from entering their building!The complexities of Iran’s society and its culture and the different agendas of its so many localities make development such an elaborate matter. Coming to such cases one has to notice that there are some provincial communities who advocate such policies. Iranian women battle for economic self-sufficiency and equal employment rights has been a long one, but it is far from over. One way to assist them is to remind such communities of the facts of the matter and the realities of one’s incentives in a labor market.

Wednesday, September 10, 2008

It is Ramadan, the month of fasting in Iran and the rest of Islamic world. Even in stores on Devon Street in Chicago one can see the food menu for this month: dates, coconut dates, milk, sweets and etc.Given the fast lasts from dawn to dusk, the believers need meals rich in calories. Thus there is an increase in demand for meat, chicken, milk and in Iran for sweets such as Bameyeh and Zoulbia (soaked in honey they make any sweet tooth person happy and are the nightmare of those who care about their shapes). The demand increases and thus the equilibrium price rises. Under normal circumstances this would be a business cycle of market, but when inflation is passing 27% it is going too far for middle class and low income households in Iran.In response to the price hike and in order to provide the populace by affordable food products, government has taken upon itself to distribute inexpensive chicken, meat and other products. Thus there are queues across the country for these products. The success of this effort is not known and hard to measure.Government as a distributer of products and goods is an old image in Iran. The inefficiencies and failed experiences of the past have failed to pursue current administration to stop meddling in the market. With oil price at an all time high it is inconceivable for the government to think anything else but that it can face any challenge with a pocket full of cash. It also is inconceivable for the public not to be able to afford their basic needs in this holy month. But the truth is inflation is taxing Iranian households’ budgets. Government feels obliged to do exactly what it does to keep the public happy, no matter if it makes them to stay longer in queues.However it seems government’s generosity with oil revenue and its funds is taxing veteran politicians’ patience. Many have been criticizing government’s frequent withdrawals from oil revenues. Most recently Dr. Rowhani a former Secretary of National Security Council charged by saying: “It seems some consider it their weekly duty to empty the coffers, a golden opportunity has been offered to us that it is lost now. What have been done with the oil money besides buying bananas and oranges?”It seems time for more serious approach has come.